Payroll Tax Cut: Round Two Starts With Democrats

In a new round of political horse trading, Senate Democrats are offering up a modified version of their payroll tax cut extension, one which pays for itself in a GOP-friendly manner, in order to increase the odds of its package.

It will be a compromise - a compromise between the Republican approach and our approach, a Democratic aide told Reuters. It will be very difficult for Republicans who want to be on the right side of this issue to vote against it.

The legislation has become the centerpiece of political wrangling and partisan sniping since its introduction last week.

The original bill would have lowered the rate to 3.1 percent, covered by a 3.25 percent increase on higher level incomes. The plan failed in a vote, as well as a Republican counter which would have cut the federal workforce.

House Minority Leader Nancy Pelosi, D-Calif., reportedly said such efforts would be fruitless, according to TPM.

It's unworthy of the needs of the American people for them to go all around the mulberry bush with this stuff, Pelosi said. If they want to do something for the American people -- to remove the uncertainty as to whether these payroll tax cuts will be extended, whether [unemployment insurance] will be extended ... let's just get about doing it.

This is a moment, Pelosi said. They want to give tax cuts to the wealthy which they say shouldn't be paid for, and should be permanent. And they don't want to extend the payroll tax [cut] for middle-income people -- but if they do, they should be paid for ... I mean, it's a stunning thing.